How power companies can increase revenues by building FTTx networks

Utility companies can use their power networks to facilitate the construction of FTTx optical fiber networks. In this way they can gain additional revenue. Chen Guan-Hong of Huawei Technologies explains the various options that are available.

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To accelerate the transformation towards a digital economy, the European Commission has issued the Digital Single Market 2025 (DSM2025) guidance strategy. This will develop 100 Mbit/s coverage for all households and speed up to connections. In this way, EU countries are encouraged to accelerate broadband construction to meet customers’ requirements for in the future.

Currently, European Union (EU) national fixed broadband networks mainly use copper lines. To improve the network speed new technologies must be introduced. Therefore, the FTTx optical fiber access network is gradually getting more attention from governments. However, FTTx construction requires a huge investment cost, which hinders its large-scale construction. In this case, using the existing public utilities infrastructure to construct FTTx is a feasible solution to reduce costs. Public utilities infrastructure for gas, water conservancy and electric power can also reap the advantage of constructing the FTTx network by using the power network infrastructure.

Four business models of electric power bandwidth operations

In European countries including Norway, Ireland, Italy and Romania, many electric power companies have participated in optical fiber network construction and operations based on different business models. Based on the characteristics of power infrastructure collaboration network construction and specific cases, electric power companies carry out bandwidth operation services. There are four business models for operating communications networks.

Lease mode

Power companies play a relatively simple role in leasing mode. They mainly authorize operators to use power resources and allow them to use pole pipes to install optical cables. The carrier periodically reports the number and status of the electric poles to the power company and liquidates the leasing fees according to the quantity. This mode allows power companies to gain additional revenue with minimum investment.

The Romanian Cable System & Romanian Data System (RCS & RDS) is a leading integrated carrier in Southeast Europe. It provides CATV, Internet, VoIP, wireless, satellite TV and TV services for multiple countries. During the development of broadband services, RCS & RDS leased infrastructure including poles and pipes from city builders and power distribution companies. It then used its own professional teams to lay out optical fibers to quickly improve network construction efficiency and maintain a leading position in the market.

Note to readers:

Electric power companies encounter slow growth in their main businesses. They are exploring the new ways to monetize underutilized assets, such as using its existing power communication networks. Broadband policies have been actively promoted in regions and countries and broadband operation services become one of the new growth points for power companies.

Chen Guan-Hong, Huawei Technologies Ltd

Such network resources of public service providers have been incorporated into the national broadband construction ecosystem. These external environments are now driving power companies to participate in regional and national broadband construction.

In the electric power industry, Huawei provides a one-stop ICT solution and puts forward “New ICT, Bits Drive Watts”. Huawei and partners can enable power companies to carry out broadband operation services, bringing digital technologies into every home and each electric power enterprise and becoming the best partner in the digital transformation of the electric power industry.

Wholesale mode

In the wholesale mode, power companies are responsible for active and passive optical fiber network construction, and wholesale and customized E2E infrastructure based on requirements to help telecom operators provision broadband services. Compared with the leasing mode, this mode enables power companies to invest a large amount of resources in network construction. The advantage of this mode is that power companies not only make full use of power grid resources, but also greatly increase the operating revenue of electric power companies. However, figuring out how to efficiently plan, construct and operate optical networks is the biggest challenge faced by electric power companies in wholesale mode.

The ENEL power enterprise in Italy is in the world’s top five energy groups. In December 2015, ENEL established the Enel OpEn Fiber (renamed OpEn Fiber) subsidiary, developed the optical network wholesale service and merged with the Metroweb fiber network infrastructure provider at the end of 2016 to become one of the main pipeline operators in Italy. After winning the bid for the first phase of Italy’s national broadband project in 2017, OpEn Fiber used poles, pipes and substation sites of the ENEL power network to deploy a large number of optical fiber networks and sites. The goal is to provide gigabit fiber infrastructure wholesale services in the telecom market.

Joint venture

In promoting national broadband construction, the Irish government decided to allow state-owned electric power companies (ESBs) to use the power network infrastructure to build an open optical fiber access network (Open Access Network) to provide channels for carriers and Internet service providers (ISPs) to develop services and accelerate national broadband construction. The ESB selected the carrier Vodafone through bidding and jointly developed the optical fiber access network. In May 2015, the ESB formally established the joint venture SIRO to jointly invest in the all-optical network construction.

In addition to the joint investment, with the power grid resources and knowledge of power companies, and the technology and experience of telecom operators, the two parties cooperate with each other to cooperate and efficiently deploy optical fiber networks and sites, which is the biggest advantage of the joint venture mode. It can also solve the network construction technology challenge faced by electric power companies in wholesale mode.

Integration mode

To explain it simply, electric power companies use their own power network infrastructure to construct optical fiber networks, obtain broadband service licenses and develop broadband services in the integration mode. At the same time, electric power companies are also responsible for the costs and risks of all telecom business investments.

Norway’s Lyse Group is a regional infrastructure supplier that provides power distribution services for local households and enterprises. Lyse leverages the advantages of collaborative construction of pipes and poles, fully utilizes existing resources, deploys optical cables on the infrastructure of electric power networks and set up a wholly-owned subsidiary, Altibox. Altibox delivers broadband services, such as IPTV, and cooperates with other local power distribution companies through the electric power industry ecosystem to jointly expand services. In a short period of time Altibox became one of the large FTTH carriers in Northern Europe.

Summary

Based on the availability and reliability of the existing power network infrastructures, electric power companies can provide instant and wide-coverage resources, efficiently complete fiber system construction in some areas and provide faster and better broadband services and competitive prices.

Review the preceding four business models. Each mode has its own advantages and disadvantages. When using the power infrastructure for FTTx deployment, power companies need to consider which mode is the most suitable for themselves and the most effective way to achieve the company’s development goals. In addition, the development of the overall telecom market, such as the development trend of broadband services, reliability of partners, and other potential competition, is an important factor for power companies to carry out power bandwidth operation services.

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